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# A hurricane completely destroyed Janet's duplex during the current year

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Janet, (single) has the following items for 2006:

- Salary \$140000
- Home mortgage interest \$10,000

A hurricane completely destroyed her duplex during the current year. She lived in half of the duplex & rented the other half. She paid \$400,000 for the duplex & has taken \$80,000 of cost recovery on the rental portion. It was worth \$420000 at the time of destruction. Janet's insurance policy paid her 90% of the FMV.

Household items destroyed in the hurricane had a basis of \$15,000 & FMV of \$8500. There was no insurance recovery on household items.

Janet purchased a painting 3 years ago for \$4000. At the time of the hurricane, the painting was worth \$10000. She purchased the painting as an investment w/ the intent to sell it when its value exceeded \$12,000. There was no insurance recovery on the painting.

Compute Janet's Taxable Income For 2006

#### Solution Preview

Hello,

We start with the salary (income) \$140,000. We first deduct the mortgage interest \$10,000 to get the Adjust Gross Income (AGI) = ...

#### Solution Summary

The expert examines the taxable income and home mortgage interest rates. A hurricane destroying a house and the taxable income for the list is determined.

\$2.19